Efforts to create a body to fight money laundering remain on hold, as a
sub-decree designed to bring it into being languishes at the Ministry of Justice
(MoJ).
"It's been stuck in the committee stage at the MoJ for about six
months," said Graham Shaw, international program officer at the UN's Office of
Drugs and Crime (UNODC).
Officials at the MoJ could not say when the
sub-decree would become law.
The government has made several commitments
to tackle money laundering in recent months: one was at the Association of
Southeast Asian Nations (ASEAN) summit in Phnom Penh last November; another was
given the following month at the Conference on Money Laundering and Terrorist
Financing in Bali, Indonesia.
Money laundering is the process of
converting cash, or other property derived from criminal activity, to make it
appear legitimately earned. The International Monetary Fund estimates that it
accounts for up to 5 percent of the global economy.
The Commission of
Anti-Money Laundering (CAML), which would be under the direct leadership of
Prime Minister Hun Sen, is proposed under the country's Law on Drug Control. The
law was drafted by the government's anti-drugs body, the National Authority on
Combating Drugs, following a UNODC model.
No accurate figures exist on
the scale of money laundering here, but experts believe the problem is getting
worse.
"Our best guess is that money laundering is increasing," said
Shaw. "Cambodia is virtually the only country left in the region without these
regulations. Once again, it's the weak link".
He said that criminal gangs
from mainland, China, Hong Kong and Thailand with links to the local underworld
were the most likely to be involved in money laundering.
A statement
endorsed by the 31 Asia-Pacific countries at the Bali conference indicates that
money launderers are engaged in a wide range of illicit
activities.
"Criminal and terrorist networks engaged in money laundering
and terrorist financing activities were also involved in the trafficking of
illicit drugs, document fraud, arms and people smuggling, and other
transna-tional crimes," the statement read.
The conference heard that the
suspects in the bombing of a Bali nightclub in October 2002 were advanced
$30,000 through a money laundering network.
Shaw said that getting cash
into the electronic banking system and then into an offshore account was the
main aim of money launderers. He explained that moving it as cash was more
difficult as cash is bulky. One million dollars in $100 bills weighs at least
nine kilograms and stands 150 centimeters high.
One of the few measures
designed to tackle the problem is a prakas issued by the National Bank of
Cambodia (NBC) on October 31, 2002. It addressed some of the areas meant to be
tackled in the sub-decree, but does not establish the commission. Another
drawback is that the prakas does not apply to casinos.
What the prakas
does require, though, is that all banks operating locally must self-monitor and
report suspected money laundering. It also prohibits the opening of anonymous
bank accounts, and requires that any transaction over $10,000 is immediately
reported to the NBC.
The sub-decree, on the other hand, would require
casinos to report large transactions, with the amount stipulated by the Ministry
of Economy and Finance (MEF). Casinos would also be required to maintain a
record of all transactions for at least ten years.
At the moment large
amounts of cash can be exchanged for casino chips, then exchanged again for
'clean' cash without any reporting requirements.
The number of people
gambling at casinos just inside Cambodia is substantial: the Bangkok Post
reported recently that more than 7,000 Thais cross the border each weekend to
gamble at two casinos at O'Smach, where they spend up to $360,000 at a time.
There are more than a dozen other casinos in Poipet, Sihanoukville, Koh Kong and
Phnom Penh.
Shaw also confirmed that 'underground banks' are likely
operating here. Underground banking, which has been linked with both terrorist
networks and criminal gangs as a way of moving money around the world, operates
via a network of 'bankers' who personally guarantee an amount of money with
associates.
Once the CAML is established, it would have the authority to
investigate underground banking. It would also monitor a range of financial
transactions that occur outside the banking system, including the trading of
gold and gems.
